Diedrich response to open letter

Mr. Hunt,

In your recent open letter regarding my Small Business Support Plan you first question the timing of introducing the plan.

Since announcing my candidacy for mayor I have introduced several initiatives that are part of my mayoral platform. During the most recent strategic planning sessions held by city council, I initiated conversations about several of my ideas and how they may be built into the strategic plan moving forward. For nearly four years I have brought ideas to the table through different avenues. Sometimes those ideas are utilized and sometimes they are the springboards for something better.

Prior to developing the overview of the Small Business Support Plan, I spent time talking to small business owners and city staff to understand what we are doing and what we can do to improve. This included conversations with our Economic Development Director. This plan has not been created in a vacuum. I have discussed it at length with appropriate city staff. The plan must also wait for implementation into the next fiscal year.

I have already indicated to the Economic Development department that I plan to seek budgetary authority for the components that would have an impact in our next fiscal year. By introducing to the public now, I have been able to gain critical feedback in order to make adjustments and address any issues that could improve the plan’s effectiveness.

You have taken a complete turn from the position you took two years ago when you ran for mayor. You used the example of the BMW facility in the town you lived in. The town was able to bring them in “by waiving fees of all kinds, property taxes, development fees. Anything you could imagine, the city and state went ahead and delayed that and in some cases completely removed them.” You then said, “I think we need to couple and leverage our relationships with the state as well as the county people to drive these fees (Development Impact Fees) down.” I suppose it is politically expedient to now attack my plan to lower fees for small businesses because the candidate you support doesn’t have a plan.

When it comes to speaking directly to the plan you make several assumptions and conveniently fail to recognize other impacts that small business growth would have.

Your first assumption is that the plan is subsidizing bad economic behavior and promotes and encourages imprudence. Lowering sales tax requirements to equivalent Development Impact Fees is an industry standard mechanism for creating economic growth in communities. The Maricopa Walmart location was built using exactly this methodology.

Your assumption is that a small business owner looking for help to expand or increase operations would be making a bad business decision because they don’t want to spend their capital on DIFs. In Maricopa we do not have the luxury of already having buildings on the market for small business expansion. If we did have move-in ready sites, the cost of development would already be absorbed by the development of the community. In your assessment you conclude that a business shouldn’t expand if they cannot afford it right now. It isn’t that businesses can’t afford to do it. It is that they can’t afford to do it in Maricopa. That’s where the city can help.

In your illustration you do several things to make the scenarios work to your advantage while conveniently ignoring other things that would completely change the results. Your first scenario is current course, or status quo. The status quo is that a company won’t expand – not expand without incentives as you propose. The end result of that is that the city would see revenues of $160,000 with no growth from the business. As you illustrate with my plan, if there were growth of 50 percent, the revenues to the city would be $210,000 based on your calculations. So the city would have an increase of $50,000 that would cover the cost of the DIFs. Add to that the increase in cash flow to the business of $500,000, the increase in jobs to accommodate a 50 percent growth in business.

Ultimately it isn’t about this specific scenario. Each project will require detailed evaluation prior to any agreements being reached. My example was to merely give an overview of the idea.

That being said, you use a scenario that allows you to ignore the impact jobs has on growth by assuming a company will expand in our current market without incentives. That is a false assumption. Many small businesses will not be ready to expand and add jobs to our economy without some sort of public participation. My plan is based on the realities facing our small business community. My plan also allows a company to use the tax dollars they have created to bring greater opportunity to Maricopa. Remember, these are dollars that wouldn’t exist if they didn’t risk starting a company here.

As far as the statutory requirements, the DIFs must still be paid. They are paid through the sales tax credits, which we can legally adjust. We cannot, however, give more credit that the economic impact a company has on the community. Again, Walmart is a good example of the philosophy behind this idea.

The Small Business Ombudsman would be a member of the Economic Development Department and would serve to facilitate much of the functions that have been handled by the department or spread out over multiple people. Our city is severely understaffed. Placing this function into the new economic development position would not add to bureaucracy, but aid in helping our small business owners.

You may be surprised to know that most small businesses don’t have a business plan. Many are not even aware that they need a business license. Even those opening retail spaces don’t realize the inspections they may need to open. I would argue that while we have some savvy owners, we have over 800 business license holders in Maricopa and a vast majority have no idea what to ask or who to contact at city hall.

What I am proposing is not creating another layer, but rather filling a role that we should have had all along, but haven’t funded. Our Economic Development Director has done a great job facilitating information for business owners but quite frankly that isn’t her job.

The system is complicated and inefficient because we don’t have a single point of contact. The last thing we need at City Hall are our directors running around from department to department “shouldering the responsibility” of facilitating communication for a small business owner. That is the very definition of inefficient. Streamlining the small business owner’s service contact will allow for better communication, elimination of redundancy, reduced backtracking, and better resource management at city hall. That is exactly me delving into “eliminating the red tape.”

In 2008 you said “The local merchants and small business owners that I have talked with echo a common theme: the city of Maricopa does not care if I succeed.” The three steps that I have outlined in my plan create a framework for support for small businesses in Maricopa. It offers an opportunity to make city hall more accessible, give small businesses a voice through participation in round-table discussions, and creates the opportunity for small businesses to offset one-time fees through an aggressive incentive program geared towards economic growth and creating jobs.

I do care if our small businesses succeed, and as I have said before, I am the only candidate for mayor who has presented any plan that begins to outline strategies that can help our small businesses.